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NEW DELHI: The cabinet may shortly consider offering a price premium to all natural gas discoveries in difficult terrain like the deep sea, which will amend its earlier decision to restrict the incentive to discoveries made after October 2014 when the new gas price formula was approved. The cabinet may also consider finalising the method to calculate the premium following divergence of views within the government.

In October 2014, the cabinet approved a new gas pricing formula that aligned local prices with international benchmarks. It also decided that future discoveries in the deep sea or areas of high temperature or pressure would be allowed to charge a higher price. Companies like Reliance Industries and BP wanted higher rates for their old discoveries also. The fall in international prices has increased their frustration.

The oil ministry had proposed last year that producers should be allowed to sell a part of the gas produced from difficult fields at market rates, with the share of decontrolled gas proportionate to the difficulty in discovering the field. The fields were placed in five categories for availing premium. But the finance minister said this was not in line with the Cabinet decision of October 2014. The oil ministry now wants to take the proposal on gas premium to the cabinet for a final decision, sources said.